Sir Richard Branson has always been a daredevil. His flight in Virgin Galactic’s (NYSE:SPCE) Unity spacecraft continued his adventures, both for him and for SPCE stock. Branson continues to look for extreme endeavors, and space flight is one of his longtime goals.
But as with many high-risk, high-profile efforts, many times it seems that the idea of doing something engages people more than actually accomplishing the feat.
For example, in a parallel universe, investors would cautiously approach SPCE stock before the launch, concerned with the complexity and danger of the mission. What’s more, the CEO and founder was flying on the maiden voyage! This behavior would be punished rather than rewarded.
Then, with a successful completion of the endeavor, SPCE stock would see investors pour in with a proof of concept established.
Bull Market Glasses
But that’s not our universe. In our universe, investors roar into the hype and then sell the success. We see it all the time during earnings season.
We’re also in heady times with the market indices near all-time highs. And that makes this and other inconsistent behaviors exciting rather than foolhardy. Buy the heart, not the head!
SPCE stock was launched as a SPAC in late October 2019. It tripled its IPO price by February 2020, and then stalled during the pandemic. But by January 2021, the stock had nearly doubled again as it became a meme stock.
It has soared and swooned ever since, but SPCE stock remains up 39% for the year.
SPCE Marks a Beginning
More than anything, the flight is a demarcation line where civilian spaceflight begins.
Granted, a flight on Unity or its companion craft costs a cool $250,000, so it’s not exactly a space bus for the common man. But it’s a start.
And that’s what investors see. Branson has built some big companies, including airlines, which is a very difficult and expensive business.
As Branson famously said, “If you want to be a millionaire, start with a billion dollars and launch a new airline.”
SPCE and space are a whole different level of that.
Some see this and Jeff Bezos flight on his Blue Origin rocket on July 20, just billionaires showing off to one another. And Branson jumping ahead of Bezos’ launch certainly looked like it was just that.
However, SPCE knew its rocket ship is significantly different than Blue Origin and SpaceX’s goals. It isn’t built to hit the Karman line (100 kilometers, 62 miles) that officially determines outer space.
Getting some press before his competitors stepped in was a smart move by Branson. Blue Origin and SpaceX are focused on much bigger opportunities in the broader aerospace market, including NASA’s Artemis project and colonization of the moon, asteroids, and Mars.
Time Will Tell for SPCE Stock
It was also smart for SPCE stock to capitalize on its press and announce a new $500 million sale of new stock. Given SPCE stock’s $9 billion market cap, that’s not a big deal.
The real question is whether there’s a durable market for this high-end space tourism. That is the real challenge of SPCE stock beyond the headlines.
However, given Branson’s record, he likely has a few ideas he hasn’t shared yet regarding the future of SPCE stock. This is an interesting stock in a broader collection of aerospace stocks. On its own, it’s a celebrity speculation that may give you the ride of your life – in either direction.
On the date of publication, GS Early did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
GS Early has been an award-winning financial writer and editor for nearly three decades, working with many of the leading financial editors and publishers during that time. He’s seen a few things and heard plenty.